Presentation

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

PRESENTATION

PRESENTATION

For purposes of this report, “Ford,” the “Company,” “we,” “our,” “us,” or similar references mean Ford Motor Company, our consolidated subsidiaries, and our consolidated VIEs of which we are the primary beneficiary, unless the context requires otherwise. We also make reference to Ford Motor Credit Company LLC, herein referenced to as Ford Credit. Our consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X.

In the opinion of management, these unaudited financial statements reflect a fair statement of our results of operations and financial condition for the periods, and at the dates, presented.  The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.  Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K Report”).

Global Pandemic

On March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic and recommended containment and mitigation measures.  Since then, extraordinary actions have been taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions throughout the world. These actions include travel bans, quarantines, “stay-at-home” orders, and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations.

Consistent with the actions taken by governmental authorities, in late March 2020, we idled our manufacturing operations in regions around the world, other than China, where manufacturing operations were suspended in January and February, but began resuming operations in March. In addition, nearly all of our non-production employees outside of China are currently working remotely in order to reduce the spread of COVID-19.

To ensure the Company maintains sufficient cash reserves while taking these unprecedented actions in our operations, on March 19, 2020, we announced the suspension of our regular quarterly dividend and fully drew our corporate and supplemental revolving credit facilities for $15.4 billion (see Note 14). To further enhance our liquidity, on April 22, 2020, we issued in the aggregate $8 billion of three-year, five-year, and ten-year public, unsecured debt securities (see Note 21).

The full impact of the COVID-19 pandemic on our full year financial results will depend on future developments, such as the ultimate duration and scope of the outbreak, its impact on our customers, dealers, and suppliers, the rate at which economic conditions, operations, and demand for our products return to pre-COVID-19 levels, and the risk of a recession in key markets due to the effects of the pandemic. Although the ultimate impact on Ford cannot be determined at this time, we expect our full year 2020 results of operations to be adversely affected.

Our first quarter 2020 results include various adjustments to our assets and liabilities made due to the impact of COVID-19, the most significant of which were a valuation allowance of $855 million on certain deferred tax assets (see Note 5), a charge of $486 million to the provision for credit losses on Ford Credit’s finance receivables (see Note 8), and approximately $100 million of adjustments to net realizable value for certain assets to account for declines in auction values. Our assessments of the effect of COVID-19 on our financial statements, including estimates, are based on a variety of factors and are subject to many uncertainties.

Although the potential magnitude and duration of the business and economic impacts of COVID-19 are uncertain, we believe the phased restart of our manufacturing plants, supply network, and other dependent functions is probable of commencing in the second quarter of 2020. We believe this, along with our cash on hand at March 31, 2020, funds received in April 2020 in connection with our unsecured debt offering, and management's operating plan, will provide sufficient liquidity to fund our operations for at least the next twelve months from the issuance of these financial statements. If we experience a significant delay in the phased restart of our manufacturing operations, or we are unable to maintain expected levels of production, we may take additional actions, such as further reducing costs or seeking additional financing.